Thursday, November 21, 2013, AM | Leave Comment
Before you know it, the Fall 2014 first semester of your college will be upon you. You may have overcome the daunting challenge of getting accepted to the college you had applied to.
Next comes the part of how to find financial help for your two- or four-year college. What do you do? The private loans – directly from banks and other financial institutions – are expensive, to say the least – and hard to get in this still recovering economy.
Your best chance to get a loan and a lot less expensive I might add, is from the good old Federal Government through a variety of programs.
With college costs continuing on an upward spiral, most families – even those with scholarships and grants – need to take out loans to foot the bill.
Fortunately, several affordable student loan choices are available to help you finance a college education.
Federal Stafford Loan
The most common student loan is the Federal Stafford Loan. It offers a low fixed interest rate and flexible repayment options, including deferred payments until the student graduates.
The Stafford loan is further divided into two categories:
Subsidized Stafford Loan
This type of loan is awarded to qualifying students based on their financial needs. It offers a 6.8% interest rate to undergraduate students for the 2013/2014 academic year. This fund is interest-free while the student is attending school.
Unsubsidized Stafford Loan
This type of loan offers a 6.8% interest rate to undergraduate students for the 2013/2014 academic year. This fund accrues interest while the student is attending school.
Repayment begins 6 months after student graduates, withdraws, or drops below half-time status. The student has up to 10 years to repay the loan at a minimum of $50 a month.
Federal Perkins Loan
Students may also qualify for a Federal Perkins Loan. This type of loan is need-based with a 5% fixed interest rate.
Federal PLUS Loan
The Federal PLUS Loan allows parents and graduate students to borrow up to the cost of college attendance less any other financial aid received.
Private Lenders Make Your Life Harder With Student Debt
According to recent data from the Consumer Financial Protection Bureau (CFPB), the total outstanding student loans are approaching $1.2 trillion, with $165 billion of that in the form of private student loans which are obviously not backed by any federal agency.
The Project On Student Debt estimates that two thirds of 2011 graduates had debt averaging $26,600; and that one third of graduates had private loans averaging $12,550.
Over at Forbes, Maggie McGrath, Forbes Staff has compiled a detailed description of 8 Ways Private Lenders Make Your Life With Student Debt Harder.
In a Nutshell
All of these federal loan options offer better rates and more favorable terms than most private education loans.